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The Affordable Care Act: The Key to Opening “Job Lock” for Entrepreneurs

By: Cassius Butts, Regional Administrator, U.S. Small Business Administration

There are currently 23 million self-employed entrepreneurs in United States, and that number continues to rise. In Kentucky alone, more than 339,000 self-employed firms are contributing to our economy’s growth and success.

Thanks to technology and aspiring entrepreneurs looking to open their own firms, small business startups continue to increase, but one key concern for entrepreneurs has been unaddressed in the past: health care. But the Affordable Care Act is offering exciting new options for health coverage for the self-employed.

Increased access to quality, affordable health care will make it easier for entrepreneurs to start a business rather than stay at larger firms simply because of the lack of access to affordable insurance outside of work, commonly referred to as "job lock.” In fact, a recent study by the Urban Institute estimated that by making health insurance more affordable and ending discrimination against pre-existing conditions, the law will enable an additional 1.5 million Americans to go into business for themselves.

Under the Affordable Care Act, self-employed business owners now have more options than ever to find affordable health coverage. It’s important to know the facts about the choices available as you start, or continue to operate, your own business.

First, beginning in January 2014, self-employed individuals and other consumers will be able to purchase their insurance through new Health Insurance Marketplaces (also referred to as Exchanges).

All qualified health insurance plans offered in these new insurance Marketplaces will cover a core package of “essential health benefits,” ranging from preventive and wellness services to maternity care and mental health services. The plans will vary according to the percentage of costs the health plan covers. Additionally, issuers may offer catastrophic-only coverage, which includes free prevention and several primary care visits, primarily to young adults under age 30.

Enrollment begins on October 1, 2013, and the Marketplaces open in January 2014. For more information on the Kentucky Healthcare Exchange, go to http://kynect.ky.gov.

Self-employed individuals may also qualify for lower monthly premiums when they purchase private health coverage in the Marketplace. When you fill out a Marketplace application, you will learn if you qualify for these lower costs. Depending on income, consumers and the self-employed may also qualify for lower out-of-pocket costs, so they won't have to pay as much for deductibles, copayments, and coinsurance. For more information on individual tax credits and cost-sharing reductions offered through the Marketplaces, visit https://www.healthcare.gov/what-if-im-self-employed.

Beginning in 2014, the provisions of the Affordable Care Act call for each individual to have basic health insurance coverage (known as minimum essential coverage) for each month; qualify for an exemption; or, make an Individual Shared Responsibility payment when filing a federal income tax return starting in 2015.

If coverage is unaffordable, if you spend less than three consecutive months without coverage, or if you qualify for an exemption for other reasons (including hardship and religious beliefs), you will not be required to make a payment go to http://www.sba.gov/healthcare,

The Affordable Care Act enables America’s innovators a way out of “job lock” by providing access to quality, affordable health insurance. And in a country built on the spirit of entrepreneurship, this is good news for us all.